History of the American Economy 12th Edition by Gary M. Walton – Test Bank

History of the American Economy 12th Edition by Gary M. Walton – Test Bank

Chapter 7
Hard Realities for a New Nation

General Questions

1. Which of the following statements accurately characterizes American trade during the Revolutionary War?
a. The American colonies actively traded with France, Holland and Spain until 1778, when trade was hampered by British blockades.
b. British blockades hampered the trade activities of first Northern and later Southern ports.
c. American trade remained below pre-war levels.
d. Decreases in imports led to increases in domestic production of textiles, beer and other products.
e. Both b and c are correct.
ANSWER: e. Both b and c are correct.

2. Under the Articles of Confederation,
a. only the federal government could issue paper money.
b. only the federal government had the power to levy taxes.
c. the federal government was ultimately responsible any debts incurred by the states.
d. the federal government had a difficult time negotiating military and economic treaties with other nations.
e. All of the above.
ANSWER: d. the federal government had a difficult time negotiating military and economic treaties with other nations.

3. What was not one of the problems of the Articles of Confederation?
a. It did not allow the federal government to tax.
b. It did not give the federal government sufficient power to define international relationships.
c. It could not keep the states together as a political union.
d. It did not give the federal government the sole right to mint coins.
ANSWER: c. It could not keep the states together as a political union.

4. Which of the following statements is an accurate description of the Revolution?
a. It never had majority support.
b. Two-thirds of the population either opposed it or did nothing to support it.
c. It became a popular war, maintaining widespread popular support after 1776.
d. Both a and b are correct.
e. None of the above are correct.
ANSWER: d. Both a and b are correct.

5. In the U.S., the Revolutionary War (1775-1781) was immediately followed by an increase in:
a. trade.
b. inflation.
c. real per capita income.
d. slave imports.
ANSWER: b. inflation

6. Fighting alongside the British in the Revolution, the ___________ lost much of their land and position in America after the War.
a. Iroquois
b. French
c. Mexicans
d. Sioux
ANSWER: a. Iroquois

7. What method did the U.S. use to fund most of the cost of the Revolutionary War?
a. Increases in taxes
b. Increases in the issue of paper money
c. Increases in bond sales
d. Increases in tariffs
ANSWER: b. Increases in the money supply

8. The Continental Congress faced several constraints in its effort to finance the Revolutionary War. The largest source of funds for the War was:
a. excise taxes.
b. domestic bond sales.
c. borrowing from foreign powers, such as France.
d. printing money.
ANSWER: d. printing money.

9. The hyperinflation of the Revolutionary War period was in part caused by the issuance of paper money with a face value in ______ of dollars.
a. millions
b. tens of millions
c. hundreds of millions
d. billions of dollars
ANSWER: c. hundreds of millions

10. Which of the following responsibilities did the Constitution not give to the federal government?
a. The right to set laws on patents
b. The sole right to mint coins
c. The right to establish post offices
d. The right to tax.
e. All of the above
ANSWER: e. All of the above
11. Which of the following most accurately and completely describes the responsibilities the Constitution gave to the federal government?
a. The authority to provide for copyrights and patents
b. The right to tax
c. The authority to regulate interstate commerce
d. All of the above
ANSWER: d. All of the above

12. The Constitution:
a. empowers each state to negotiate its own treaties with foreign governments.
b. empowers the Congress to pay off all public debts, including those incurred by the states.
c. allows for states to set tariffs on goods imported from another state.
d. allows only the Congress to set tariffs on goods moving from one state to another.
ANSWER: b. empowers the Congress to pay off all public debts, including those incurred by the states.

13. Initially the Constitution:
a. empowered each state to negotiate its own treaties with foreign governments.
b. provided for each slave to be counted as 1 person in determining a state’s membership in the House of Representatives.
c. gave the federal government the exclusive power to coin money.
d. allowed states to set tariffs on goods imported from another state.
e. All of the above.
ANSWER: c. gave the federal government the exclusive power to coin money.

14 What was not one of the Constitutional compromises about slavery?
a. Limited the importation of slaves to 20 years
b. Northern states had to abide by the Southern states’ slavery laws
c. Prevented imported slaves from being taxed
d. Slaves counted a 60% of a person for congressional representation
ANSWER: c. Prevented imported slaves from being taxed.

15. The writings of the 18th century economist _____________ greatly influenced Constitutional provisions regarding private property rights.
a. John Maynard Keynes
b. Alfred Marshall
c. Adam Smith
d. John Hicks
ANSWER: c. Adam Smith

16. The economic system envisioned by the Constitution _________.
a. embodied Adam Smith’s emphasis on protecting private property
b. used the Civil Code of France, rather than the English Common Law, as its foundation.
c. enshrined the traditional 18th century model of mercantilism which allowed the government to have large control over private ownership of goods and services
d. fostered Jefferson’s idea of a democracy based primarily on agriculture
ANSWER: a. embodied Adam Smith’s emphasis on protecting private property

17. Which of the following was the chief source of federal revenues throughout most of the nineteenth century?
a. Income taxes
b. Property taxes
c. Tariffs
d. Inheritance taxes
ANSWER: c. Tariffs

18. During the Revolutionary War, the U.S. trade deficit increased because:
a. U.S. imports decreased, while U.S. exports increased.
b. U.S. imports increased, while U.S. exports decreased.
c. U.S. exports decreased more than U.S. imports decreased.
d. U.S. imports decreased more than U.S. exports decreased.
ANSWER: c. U.S. exports decreased more than U.S. imports decreased.

19. During the period following the Revolution,:
a. the populations of the major cities increased dramatically.
b. per capita exports decreased slightly for the southern states.
c. per capita exports decreased sharply for the southern states.
d. on average, per capita exports increased.
ANSWER: c. per capita exports decreased sharply for the southern states

20. Immediately following the Revolution, in the 1780s,:
a. indigo was the most important U.S. export (in terms of dollar value).
b. Spain placed severe restrictions on trade between its colonies and the U.S.
c. the U.S. became the main provider of shipping services for the French and West Indies.
d. Great Britain eliminated tariffs on rice and tobacco.
ANSWER: b. Spain placed severe restrictions on trade between its colonies and the U.S.

21. Following the Revolution,
a. America found itself outside the protection of the British empire.
b. trade alliances with both Spain and France began to crumble.
c. all American-built vessels were ineligible to trade with the British Empire.
d. All of the above are correct.
e. Only a and b are correct.
ANSWER: d. All of the above are correct.

22. Post-Revolutionary trade data show that after 1790:
a. U.S. trade with non-British areas of the Caribbean increased.
b. the export of food to the West Indies increased.
c. trade in the southern U.S. did not keep pace with population growth.
d. the U.S. exported tobacco to France and the Netherlands.
e. All of the above.
ANSWER: e. All of the above.

23. Data presented in the text compare exports per capita in the early 1790s with exports per capita just prior to the Revolution. The data show that by the early 1790s, exports per capita had increased in _____________, but had decreased in ___________________.
a. the Upper South; the Lower South
b. the Upper South; New England
c. New England; the Middle Atlantic states
d. the Middle Atlantic states; the Upper and Lower South
ANSWER: d. the Middle Atlantic states; the Upper and Lower South

24. During the Napoleonic Wars (1793-1815),
a. America experienced periods of full employment.
b. urbanization increased sharply.
c. America bore the brunt of the mercantilist policies of both England and France.
d. Both a and c are correct.
e. Both a and b are correct.
ANSWER: d. Both a and c are correct.

25. Which of the following statements presents accurate information about the Napoleonic Wars (1793-1815)?
a. The major adversaries in the Wars were England and Canada.
b. The peace treaty that ended the Wars is known as the Essex Decision.
c. The Wars led to increased demand for American shipping services.
d. During the temporary peace of 1801-1803, demand for U.S. re-exports increased.
ANSWER: c. The Wars led to increased demand for American shipping services.

26. Common American re-exports of the Napoleonic War period included all of the following except:
a. cotton.
b. sugar.
c. coffee.
d. spices.
ANSWER: a. cotton

27. The Embargo Act (1807):
a. partially opened up trade with some specific prohibitions.
b. successfully forced England and France to ease their harassment of neutral ships.
c. reduced U.S. imports, but increased U.S. exports.
d. remained in effect until after the Civil War.
e. None of the above are correct.
ANSWER: a. encouraged capital to flow into the manufacturing sector.

28. The Embargo Act (1807):
a. had a devastating effect on U.S. manufacturing.
b. led to increases in U.S. exports and per capita income.
c. increased U.S. imports, but decreased U.S. exports.
d. prohibited U.S. ships from trading with all foreign ports.
e. All of the above.
ANSWER: d. prohibited U.S. ships from trading with all foreign ports.

Economic Insights
1. The best estimate for the size of overseas trade as a proportion of national income in 1774 is:
a. 0%-5%.
b. 15%-20%.
c. about 50%.
d. 70%-75%.
ANSWER: b. 15%-20%.

2. When the colonies obtained independence they were no longer bound by a number of English laws, including the Navigation Acts which restricted and regulated trade. What best describes the impact of the removal of the Navigation Acts for commodities that were imported from England?
a. A shift out of the supply curve and a shift back in the demand curve, which
lowered prices.
b. A shift out in the supply curve, which decreased the price and increased the
quantity.
c. A shift back in both the supply and demand curves, which decreased quantity.
d. A shift back in the demand curve, which lowered both price and quantity.
ANSWER: b. A shift out in the supply curve, which decreased the price and increased the
quantity.

Economic Analysis
1. If a the price index was 60 in 2000 and the price index was 90 in 2009, the best estimate of the annual inflation rate between 1998 and 1999 is:
a. 15%.
b. 40%.
c. 50%.
d. 90%.
e. 7/5.
ANSWER: c. 50%.

2. The U.S. terminated its role in the slave trade in the early 1800s. What is the best assessment of what would have happened had the U.S. not ended the slave trade?
a. The price of slaves would be lower and the wages of free workers would be lower.
b. The price of slaves would be higher and the quantity of free workers would be lower.
c. The price of slaves would be lower and the wages of free workers would be higher.
d. The quantity of slaves would be higher and the quantity of free workers would be higher.
e. The quantity of slaves would be lower and the wages of free workers would be lower.
ANSWER: a. The price of slaves would be lower and the wages of free workers would be lower. The supply for slaves would shift out, thus lowering the price of slaves and increasing the quantity of slaves. Because slaves and free workers are substitutes, the demand curve for free workers would decrease, thus decreasing both the price and quantity of free labor.